Tata, one of India's largest corporations, has announced its exit from a US$5 billion steel mill project in central Vietnam after procedural hurdles delayed approval for five years.

“The company had communicated it to the Vietnam government last year and the chapter has been closed recently,” an executive close to the development told Indian news website www.businessworld.in.

Cyrus Mistry, chairman of Tata group, told a Tata Steel annual meeting last year that “There was no hope on the project in the recent years and everything culminated as expected.”

The project was located at the Vung Ang Economic Zone in the north-central province of Ha Tinh and was supposed to produce 4.5 million tons a year.

Tata had a 65 percent stake in the project while Vietnam’s Steel Corporation held 30 percent and Vietnam Cement Industries Corporation 5 percent.

A memorandum of understanding for the project was signed in May 2007 and the joint venture agreement was signed in August 2008. The first phase of the project was originally scheduled for completion in 2012, and the final phase in 2018.

But the project was delayed over land allocation while a site previously earmarked for Tata was handed over to a Taiwanese competitor.

Under Vietnamese law, the government pays for land clearance, but the province wants Tata to cover cost, said to reach hundreds of millions of dollars. But the two sides were not able to reach a consensus.

Tata initially refused to pay anything but later offered a payment figure, which was less than half of the total cost and was not accepted by the province, according to a Thoi bao Kinh te Saigon (Saigon Times) report.

The Vietnamese government also asked the company to move the project location to Dung Quat Economic Zone in the central Quang Ngai Province for a lower relocation cost, but the firm insisted on staying at Vung Ang to stay close to the Thach Khe mine, which has the largest iron reserve in Southeast Asia.

Managers of the Vung Ang Economic Zone on Friday told Thoi bao Kinh te Saigon they had not received an official statement concerning Tata’s exit.

But they said the company worked little on the project over last year.

Vietnam's government last year allowed another Tata member, Tata Power, to study the feasibility of a 1,200 megawatt thermopower plant in the Mekong Delta province of Soc Trang.

The project was given to state-owned corporation Song Da in 2010 but the group returned it last August to focus funds in hydropower projects.